The index is based on a survey of home buying and selling sentiments and income changes, as well as beliefs about the future for home prices and mortgage rates. It found that the net share of Americans who say it is a good time to buy a home dropped by nearly a third over the past year to 15 percent from 21 percent. The net share who said it is a good time to sell also fell, to 30 percent from 36 percent. Most Americans believe mortgage rates will go up over the next year, while fewer believe that home prices will continue to rise than they did before.

Doug Duncan, Fannie Mae's chief economist, called the drop in home price growth expectations "notable," with the net share of consumers expecting home prices to rise falling 19 points from the survey high hit at the start of 2018.

"While declining home price expectations may point to improving affordability, the share of consumers who think it's a bad time to buy has grown over the last year, and high home prices remain the most frequently cited concern," Duncan said in a press release. "It is plausible that consumers believe that price gains could decelerate further, making it worthwhile to wait rather than act now."